Analysis : Wasserman--An Astute Giant Remains Behind the Myth

When Pope John Paul II came to town last fall, he wanted, among other things, to meet MCA Chairman Lew R. Wasserman.

Who can blame him? Hollywood's longest-lasting studio chief, the 74-year-old Wasserman is seldom described as anything less than a "legend."

In the past week, developer Donald Trump's announced plan to buy up to 24.9% of the entertainment giant has only focused more attention on Wasserman, as investors struggle to decode what some seem to believe is a closely held plan for the company's future.

But what does Lew do, really?

According to interviews with MCA executives and Hollywood insiders during the past year, Wasserman is neither the god that hyperbole-prone journalists may sometimes imagine, nor the relic that hungry raiders and arbitragers might wish.

Rather, he is a retiring giant, alert yet withdrawn--and still potent, largely because his network of close relationships with powerful business and government figures has grown rather than diminished with time.

"Lew's personal relationships are unequaled, and can be brought to bear against an opponent," boasted one high MCA executive several months before Trump's approach. The executive contended, for example, that Wasserman's friendship with Ronald Reagan would guarantee extremely close regulatory scrutiny of any would-be corporate raider.

Whether MCA's defenses are quite that good is hard to know. But it is possible to sort through some of the more common myths surrounding Wasserman, one of the most written about and yet seemingly least understood U.S. executives.

Reality: According to MCA's latest proxy statement, Wasserman owns less than 7% of MCA's roughly 73 million outstanding shares--much less than David Murdock's 25% of Castle & Cooke Inc., or the Walton family's 16% stake in Wal-Mart Stores Inc. If all the stock-owning trusts in which Wasserman has an interest were aggregated, the total would be closer to 15%. But Wasserman's power over the various trusts is shared with other trustees, including MCA President Sidney Jay Sheinberg and the family of company founder Jules Stein. Wasserman has said that Sheinberg will eventually inherit at least partial control of his own company shares.

Myth: Wasserman's recent illness has impaired his ability to run the $2.6-billion (annual sales) entertainment conglomerate.

Reality: Wasserman, who still shows up at the office, began scaling back his operating control of MCA nearly a decade ago, and has been little involved with the company's day-to-day business for years. Sheinberg holds the operating reins, according to many company officers.

But there have been some changes since Wasserman's stay in Cedars-Sinai Medical Center following colon surgery last summer. For instance, certain real estate managers who had reported directly to Wasserman now report to Sheinberg, according to one high-level MCA executive.

Another executive says that a trio of outside advisers--investment banker Felix Rohatyn and Washington lawyer Robert Strauss, both on the MCA board, along with Wall Street attorney Martin Lipton--have assumed new importance since the chairman's illness. "They're powers behind the throne, if you want to know the truth," the executive claimed.

Myth: Wasserman is interested in selling MCA.

Reality: According to most signs, Wasserman isn't interested in selling the company, though he might be willing to strike a deal that would stabilize its stock and guarantee some measure of independence for the future.

("This company is not for sale," Sheinberg is quoted as saying in the Feb. 29 issue of Business Week.)

Clearly, he's interested in talking. An ex-Hollywood agent, Wasserman loves nothing better than to negotiate, and he's been negotiating the future of MCA for years, including merger discussions of varying degrees of seriousness with Walt Disney Co., Sony Corp. and RCA.

Interestingly, insiders claim that he pulled out of two potential deals--with Disney before the Bass Bros. took their stake, and with RCA before it was acquired by General Electric--largely because Sheinberg wouldn't have been guaranteed sufficient authority in the merged entity.

Myth: Behind the scenes, Wasserman rules Hollywood.

Reality: Wasserman's influence over industry policy is considerable, particularly on the rare occasions when studio chiefs meet as directors of the Motion Picture Assn. of America, a powerful trade group.

But his role in labor negotiations--once decisive--belongs to the distant past. "He's been scaling back for 10 years," says the chief of a rival studio. When top studio executives met on the eve of a brief strike by the Directors Guild of America last summer, for instance, the key role was played by Warner Bros. Chairman Bob Daly.